“The Treasury is to receive a £35bn boost as part of a deal with the Bank of England that will effectively reduce public debt. Chancellor George Osborne and Bank Governor Sir Mervyn King have agreed that the BoE will give the Treasury interest earned through its £375bn economy-boosting programme known as quantitative easing (QE).

The cash – currently on the BoE’s books – will flatter the public accounts by reducing the budget deficit, while also acting as a ‘small loosening of monetary conditions’ equivalent to taking more QE action, according to the Bank. The announcement comes a day after it decided not to extend QE at its monthly policy-setting meeting..”